Allied Domecq has conceded defeat in its two-way takeover struggle for control of Australian company Peter Lehmann Wines.
Allied pulled out after Peter Lehmann directors backed an identical four Australian dollars a share offer from privately owned Swiss group Hess.
With Allied owning 14 per cent of Peter Lehmann Wines (PLW), it said it acted in the best interests of its own shareholders by accepting the Hess price for its holding and by not raising the stakes further in the month-long bid battle.
The Hess offer values PLW, which is based in the Barossa Valley in South Australia, at around £62 million.
Allied chief executive Philip Bowman said: "While we remain firm believers in the potential of Peter Lehmann Wines under the control of Allied Domecq, we have an obligation to generate value for our own shareholders.
"Despite the significant cost and revenue synergies that we believe would accrue to PLW as part of the Allied Domecq group, we do not believe that it would be in the interests of our shareholders to increase our offer further."
The move by Allied comes after Peter Lehmann directors threw their weight behind the Hess bid, citing their "positive relationship" with the Swiss company and the intention of Allied to change distribution arrangements.
Hess made the first approach for PLW in August but Allied - best known for making Beefeater Gin and Tia Maria - tabled a higher offer last month.
Both companies subsequently sweetened their bids, although Allied failed to win the support of founder and major shareholder Peter Lehmann.
PA